Sidelights

Jack Rowe is a turnaround king, credited with saving insurance industry
giant Aetna Inc. from the brink of extinction. When Rowe joined Aetna as
chairman and chief executive officer (CEO) in 2000, the company was deep
in trouble. Doctors and patients alike were fed up with its policies. In
fact, more than 700,000 practitioners nationwide had filed a class-action
lawsuit against the insurer, citing dubious billing practices and
patient-care interference because doctors had to get permission for even
the most basic procedures. Financially, the company was a mess, too. But
none of that scared Rowe, who came in with an ambitious plan for
restoration. Rowe laid off thousands of workers and trimmed the customer
base. He sought ways to practice good medicine and good business. As a
physician himself who once considered suing Aetna, Rowe concentrated
efforts on improving relationships with doctors. The hard work paid off.
In just three years, Rowe's leadership transformed Aetna
"from being a poorly run company with very few prospects to an
intriguing one with very solid growth," Lehman Brothers Inc. senior
analyst Joshua Raskin told
BusinessWeek'
s Diane Brady.

Rowe was born on June 20, 1944, in Jersey City, New Jersey. His father,
Albert, played professional soccer in Britain, then worked in a pencil
factory. His mother, Elizabeth, worked as a hospital clerk. An Irish
Catholic, Rowe attended Jesuit-based Canisius College, located in Buffalo.
He graduated in 1966, then studied medicine at the University of Rochester
in New York, earning his medical degree in 1970. From 1970-72, Rowe
completed a residency in internal medicine at Harvard Medical School and
Beth Israel Hospital, located in Boston. By 1976, Rowe was an instructor
at Harvard and later became a professor. He specialized in gerontology
(the study of the aging process). At Harvard, Rowe founded and directed
the medical school's Division of Aging. He also served as chief of
gerontology at Beth Israel Hospital.

In 1988, New York City's Mount Sinai Hospital and School of
Medicine lured Rowe away from Harvard to become its president. The
position saddled Rowe with a lot of administrative work, but he still
found time to maintain a small practice and spent one month each year
rounding with medical students. Under Rowe, the Mount Sinai medical school
also received a lot of money in research grants from the National
Institutes of Health.

Things went smoothly for Rowe until the late 1990s, when managed-care
cutbacks made money tight. Government reimbursement money dwindled, making
the hospital's required care of the poor more costly. Rowe worried
about keeping the hospital afloat. He thought a merger with the New York
University (NYU) Medical Center would fix the fiscal mess. The plan was
announced in 1997. Rowe figured Mount Sinai could save money by combining
office operations and sharing high-priced medical equipment with NYU. He
also thought the merger would give the institutions better bargaining
power with insurers. NYU faculty opposed the merger and formed an
opposition group called the Committee of Concerned Physicians. The group
published fiery memos, according to the
Wall Street Journal'
s Lucette Lagnado, warning that their medical school was about to be taken
over by Rowe, "the aggressive 'czar' of Mount Sinai
Medical Center."

After a year of talks, Rowe pushed the merger through, gaining prominence
as an administrator who could get tough things done. He reportedly
appeared on then-President Bill Clinton's list of candidates for
FDA Commissioner, though he was never called. With the merger complete,
Rowe, in 1998, became president and CEO of the not-for-profit Mount Sinai
NYU Health. In this capacity, Rowe formed partnerships with dozens of
neighboring hospitals to turn the institution into one of the
nation's leading academic health-care centers. Mount Sinai NYU
Health also became New York's largest employer, with 31,000
employees and revenues of $1.8 billion—all under Rowe's
direction. By the summer of 2000, however, Rowe was losing support as the
merger continued to be a sore spot for faculty. When Aetna asked Rowe to
become its CEO, he jumped at the chance, eager to attack a new challenge.

When Rowe took over Aetna, the company was in a shambles. Patients,
doctors, and shareholders were all fed up with the insurer. As one analyst
remarked to
BusinessWeek'
s Brady: "Aetna came close to blowing itself up." Wall
Street hardly gave Rowe a vote of confidence. Share prices dropped 0.7
percent after the announcement, but that is not surprising, given the
enormity of the task before him: keeping costs under control and making
peace with physicians at the same time.

Rowe brought in a new management team and developed a three-pronged attack
to restore the insurance company's health. First, Rowe cut costs by
eliminating 15,000 jobs. He shrank the customer base from 19 million to 13
million by abandoning unprofitable markets. Secondly, Rowe made peace with
physicians in May of 2003 by settling a massive class-action lawsuit
claiming unfair billing practices. Aetna became the first insurer to
settle the suit. The deal paid 700,000 practitioners up to $150 million.
Some of Rowe's moves proved good for the bottom line, but not for
customers. He raised annual rates more than 16 percent, he said, to better
reflect the actual costs of health care. Though the company suffered
losses of more than $265 million in 2001, by 2003, it had turned a profit.

As part of the class-action lawsuit, Aetna agreed to contribute $20
million to establish a foundation to study issues such as childhood
obesity, end-of-life care, racial disparities in health care, and the
uninsured. Aetna also began offering customer-driven products and gave
patients more say over their care. Speaking to
BusinessWeek
's Brady, Connecticut State Medical Society executive director Tim
Norbeck praised Rowe's performance: "Aetna has become the
physician-friendliest and userfriendliest company in America." It
is a model Rowe hopes other insurance companies will follow.